The building stands on the site of the first General Hospital of Madrid. In the 18th century Ferdinand VI decided to build a new hospital. José de Hermosilla designed it, and his successor Francisco Sabatini did most of the work. In 1805 the building assumed its hospital function after numerous work stoppages, though only a third of Sabatini's proposed project was completed. It closed as a hospital in 1969.
Extensive renovations and additions began in 1980. In 1989 Ian Ritchie added three glass circulation towers. Jean Nouvel designed an expansion of 86,000 square feet (8,000 m²), costing 92 million euros, which opened in October 2005 and includes auditoriums of 500 and 200 seats.
The museum's most famous masterpiece is Picasso's 1937 painting Guernica. The main site received 1,601,732 visitors in 2025, up 4.2 percent on 2024. It stands near the Estación del Arte and Madrid Atocha stations.
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